Option strategy of the day | Breakout in HDFC Life stock, here's a bull call spread for upside

- Buy 580 CE in the range of Rs 23-24
- Sell 600 CE in the range of Rs 15-16
- Target: Rs 12,000
- Stop Loss: Rs 6,500

The bull call spread is an options trading strategy that involves two call options. This strategy is used when the trader expects a moderate rise in the price of an underlying asset. It is executed by buying call options at a specific strike price while also selling the same number of calls of the same asset at a higher strike price.

Technical Parameters

"The stock has broken out from the congestion zone of Rs 570-572 after 10 days of consolidation, crossing and closing above the highs of the last three weeks. A bullish piercing candlestick pattern formed on both daily and weekly charts hints at the continuation of the uptrend. Targets for this breakout are placed at Rs 609/622," said Bhatt.

Derivatives Data

In terms of derivative parameters, a combined futures open interest (OI) addition of 2.5 percent has been seen on the long side. "Buying interest is picking up at 580 and 600 strikes in calls for the June series, indicating positive momentum. The stock is poised to move past the 600 zone with a support base of 560," stated Bhatt.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.